Bank Credit Growth Slows to 1.4% in FY26 So Far, Deposits Remain Steady at 3.4%

Bank credit growth in India has slowed to 1.4% in FY26 so far, down from 2.3% in the same period last year, according to the Reserve Bank of India’s latest weekly statistical survey. Meanwhile, deposit growth has remained steady at 3.4%, compared with 3.5% during the same period last year.

Year-on-Year Trends

For the fortnight ending July 25, 2025,

• Deposits: Up 10.2% year-on-year.
• Advances: Up 10% year-on-year.

This indicates that while deposit mobilisation remains healthy, lending momentum has softened in the early months of the fiscal.

Reasons for Slower Credit Growth

The modest credit expansion is largely due to,

• Lower corporate credit demand, as companies increasingly turn to market-linked instruments like bonds for financing.
• Despite recent interest rate cuts, housing loan demand has not risen as strongly as anticipated.

Broader Financial Resource Flows

While traditional bank lending has slowed, the overall flow of financial resources to the commercial sector—including loans, market borrowings, and other instruments—has increased, reflecting a shift in funding patterns rather than a contraction in investment.